Back
19 Aug 2013
Flash: EUR/USD continues to favor upside in near-term – BBH
FXstreet.com (New York) - We are suspicious of explanatory variables that are used to explain both a rising dollar and falling dollar, notes the BBH Currency Strategy Team.
Key quotes
“Yet this is precisely what much the financial press (and many observers) are doing at the moment. When the dollar rises, anticipation of tapering is often cited and the compelling logic outlined: Fed tapering underpins the dollar through wider interest rate differentials.”
“When the dollar falls, it is also attributed to tapering speculation as well: Tapering reduces the demand for Treasuries from the biggest buyer, pushing down bonds, and have a negative knock-on effect on stocks. “Beware that anticipation of tapering has become the go-to-explanation for all price activity.”
In terms of the EUR/USD, “We continue to favor the euro's upside over the near-term. The 1.3400-20 area represents the immediate cap and a break may spur a move toward 1.3500. The 1.3170-$1.3200 area is the lower end of the trading range.”
Key quotes
“Yet this is precisely what much the financial press (and many observers) are doing at the moment. When the dollar rises, anticipation of tapering is often cited and the compelling logic outlined: Fed tapering underpins the dollar through wider interest rate differentials.”
“When the dollar falls, it is also attributed to tapering speculation as well: Tapering reduces the demand for Treasuries from the biggest buyer, pushing down bonds, and have a negative knock-on effect on stocks. “Beware that anticipation of tapering has become the go-to-explanation for all price activity.”
In terms of the EUR/USD, “We continue to favor the euro's upside over the near-term. The 1.3400-20 area represents the immediate cap and a break may spur a move toward 1.3500. The 1.3170-$1.3200 area is the lower end of the trading range.”